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Asset managers have gone to great lengths in the years following the financial crisis to dissociate themselves from banks and stress to regulators that they do not pose the same kind of systemic risks to financial stability.

But they have struggled to shake off the “shadow bank” label that watchdogs and central banks continue to use to describe fund houses’ encroachment into territory previously occupied by banks. A report by the European Central Bank in October, for example, examined traditional investment funds together with money market funds and so-called financial vehicle corporations under a shadow banking category.

The direct lending activities of some fund groups now closely resemble those of companies operating in the banking sector. Asset managers have been able to step into the frame after intense regulatory pressure to shore up their balance sheets has forced many banks to reduce their direct lending.

Direct loans, commercial mortgage lending, social housing, property and infrastructure — lending activities once synonymous with the banking sector — are now a staple for asset managers.

A rebound in the global economy has further boosted asset managers’ direct lending activities as companies look to finance growth or bolster existing loans. Figures point to a buoyant future in the direct lending market. According to data from Preqin, the alternative assets data provider, Europe’s fund managers have $41bn ready to deploy in direct lending deals, twice as much as in 2012.

Tom Brown, global head of investment management at KPMG, says while asset managers have spotted the opportunities posed by direct lending, their involvement has also been backed by clients including pension funds, life insurance companies and sovereign wealth funds. “As they look at their portfolios, investors realise this is an attractive asset class,” says Mr Brown. “There has been a rotation out of sovereign debt into private debt and [direct lending] loans fit into that spectrum.”

A key initiative in Europe is under way to develop more non-bank sources of finance — a move which could give asset managers further opportunities to become involved in direct lending. One aim of the EU’s Capital Markets Union initiative, launched by the European Commission in September, is to reduce small and medium-sized companies’ reliance on bank finance and emulate the broader style of capital market that exists in the US.